Laxmi Vilas Palace Hotel sale corruption case: Why is Arun Shourie in legal trouble?

• The CBI FIR said that the hotel and the land on which it was built was valued at Rs 252 crore but was finally sold for Rs 7.52 crore, causing a loss of Rs 143.48 crore to the Centre

• The unknown officers and private persons indulged in this conspiracy from 1999 to 2002 to cause loss of money to the government, the court has said

New Delhi: Arun Shourie, who was former Disinvestment Minister in late Prime Minister Atal Bihari Vajpayee's Cabinet and oversaw one of the biggest PSU disinvestment drives that the country had ever witnessed until then, has now landed in a legal trouble. A special Central Bureau of Investigation (CBI) court in Jodhpur has ordered the registration of a criminal case against Shourie and former Disinvestment Secretary Pradip Baijal and three others on September 17 for alleged corruption in the disinvestment of the then government-owned Laxmi Vilas Palace Hotel in Rajasthan's Udaipur in 2002.

The hotel, which was earlier being run by Indian Tourism Development Corporation (ITDC), was sold to Bharat Hotels Limited, which now runs the Lalit group of hotels. The court's directive has come while hearing a closure report filed by the CBI in the case of the alleged loss of Rs 244 crore to the government during the sale of Laxmi Vilas Palace Hotel. While the CBI said in its report that there wasn't enough evidence to launch prosecution against the accused, the court has disagreed. "Prima facie, it appears that the then minister Arun Shourie and then secretary Pradeep Baijal misused their offices and caused a loss of Rs 244 crore to the Central government in the deal," said the CBI special court in its directive.

Laxmi Vilas Palace Hotel disinvestment

The CBI had registered first information report (FIR) on August 13, 2014 on the basis of a preliminary inquiry that alleged that Baijal abused his official position and entered into a criminal conspiracy in the disinvestment of Laxmi Vilas Palace Hotel. The FIR said that the hotel and the land on which it was built was initially valued at Rs 252 crore but was finally sold for Rs 7.52 crore, causing a loss of Rs 143.48 crore to the Centre.

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There was no mention of Shourie's name in the FIR at the time. The other people named in the FIR were Ashish Guha, the then managing director of investment firm Lazard India Limited which acted as financial advisor to the government in the deal, Kantilal Karamsey Vikamsey, then head of valuation firm Kanti Karamsey & Co which served as asset valuer, and Jyotsna Suri, chairperson and managing director of Bharat Hotels Limited. In its final report, the CBI had said that no evidence had emerged to establish an association between the management of Bharat Hotels Ltd (one of the accused), the asset valuer, the advisor, or senior public servants.

The FIR was registered under Section 120B (criminal conspiracy) read with Section 420 (cheating) of the IPC, and Section 13(2) read with Section 13(1)(d) of The Prevention of Corruption Act, 1988.

Why a case is being registered against Arun Shourie?

In its ruling, the CBI court said, "The unknown officers and private persons indulged in this conspiracy from 1999 to 2002 to cause loss of money to the government," the court said. "The value of the land was evaluated at Rs 45 per square yard. Even a spoon in the hotel would be costlier than that," the judge added. And since Shourie was serving as Minister of Disinvestment at the time, his role in the sale of the hotel is set to be probed. 

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